The Fed Fooled The Robots

Everyone following
the Federal Reserve today was wondering if it would keep
using the phrase "considerable time" to characterize the period
between the present and the date of the first interest-rate hike.

At 2:00 p.m. Eastern time, we learned the Fed ditched
"considerable time" in favor of the word "patience." (How is that
different, you ask? No one is quite sure yet, but most people
think its a shorter period of time).

The phrase, however, remained intact for reference, and that may
have tripped up some computer algorithms designed to flag it.

Based on its current assessment, the Committee judges
that it can be patient in beginning to normalize the stance of
monetary policy. The Committee sees this guidance as
consistent with its previous statement that it
likely will be appropriate to maintain the 0 to 1/4 percent
target range for the federal funds rate for a
considerable time following the end of its asset
purchase program in October, especially if projected inflation
continues to run below the Committee's 2 percent longer-run
goal...

CNBC was fooled. Almost immediately after the statement was
released, CNBC's Carl Quintanilla tweeted a screenshot of the
network (see above), which announced
the Fed had kept the language.

Peter Tchir from Brean Capital sent out a note after the
announcement suggesting this was an algorithm issue, since that's
where the instant market reaction often comes from. Here's
Tchir's reaction after reading the whole statement:

I think this is more hawkish
than the markets initial reaction. They are on the path to hiking
rates (even if the dots moved down by an 1/8 which is somewhat
irrelevant since the eurodollar futures are still pricing far
less). I think this
will NOT support Oil. Which means HY won't be supported. Which
means equities, will not be supported.